STRATEGIC FORESIGHT REPORT

Robert A. Manning

STRATEGIC FORESIGHT INITIATIVE

Global Trends 2030:

Challenges and Opportunities for Europe
Over the next generation, Europe will be buffeted by waves
of transformation. The reaction to the economic crisis, the
rapid empowerment of individuals thanks to the growth
of information technology, the reality of climate change,
the diffusion of power across the globe, and demographic
changes will all shape the continents future.
The National Intelligence Councils Global Trends 2030:
Alternative Worlds report, released last December
explores many of these trends in detail, some already

Transatlantic Partnership for the Global

Future
The Transatlantic Partnership for the Global Future
brings together experts from government, business,
academia, and the science and technology communities
to address critical global challenges, explore how
emerging technologies will shape them, and assess their
effects on transatlantic relations going forward. The
Partnership is a collaboration between the Brent

much in evidence. Ongoing uncertainty about the long-

Scowcroft Center on International Securitys Strategic

term health of the European Union (EU) has caused the

Foresight Initiative and the Government of Sweden.

people of many member states to look inward, stirring old

Together, we seek to make foresight actionable by

nationalisms and regional division and jeopardizing a long

connecting long-term trends to current challenges to

transition toward global institutions as mechanisms for

inform policy and strategy choices.

problem solving.
The Strategic Foresight Initiative, which strives to forge
We are approaching an inflection point that could lead
to a future of economic and political volatility and zero-

greater cooperation on futures analysis among its main

partners around the world, has rapidly become a hub for

sum behavior of inward-looking nationalisms; a more

an expanding international community of strategic

collaborative rules-based world marked by cooperative

planners in government and the private sector.

efforts at global problem-solving; or perhaps most likely,

some hybrid featuring elements of both.

Europe in an Era of Situational Power

As wealth and power shift from west to east and north to

In the coming decades the world will increasingly enter a

post-Western period. As China and India reemerge, they
may return to their respective proportions of the global
economy prior to the industrial revolution. Never in human
history has information been so instantaneously accessible
and communication been possible from anywhere on the
planet. Never have wealth and prosperity spanned so
many geographic boundaries and civilizations, from the
northern hemisphere to the southern, the west to the east.

south, the the dynamics of globalization are changing.

Regions are becoming more region-centric (e.g. intraAsian, intra-Latin American, intra-European), and emerging
G-20 economies are driving more growth. The new global
order calls for changes to existing multilateral institutions,
and perhaps new ones that more accurately represent new
and emerging realities, from political and military alliances
to global financial and trading systems, rules and norms
in the global commons of cyberspace and outer space,
and global governance writ large. A central challenge

Robert A. Manning is a senior fellow with the Atlantic Councils Strategic Foresight Initiative in the Brent Scowcroft
Center on International Security.

is preserving the successful operating principles of the

in some particular instances, partners in Asia and the

international system while better enfranchising rising

Middle East may prove more critical. The realities of

powers with more divergent views as they seek a larger

situational power will compel Europe to make more

role in global rule-making.

careful calculations about how and where it can most

effectively apply its influence. In certain circumstances,

Complicating this further is a change in the very nature

such as the Middle East crises, situational power may

of power, which has led some analysts to write of a

mean that NATO partnerships assume a greater role

G-Zero world or the end of power. While these are

in responding to problem situations. In broad terms, as

exaggerations, the world is moving toward a relatively

states and multilateral institutions negotiate new rules on

flatter, more complex redistribution of global power. This

trade, finance, cyberspace, and outer space, transatlantic

trend is likely to persist. Whether in the breakdown of the

partners will have to pool their respective influence to

Doha global trade round or the ineffectiveness of the Kyoto

achieve better outcomes.

Protocol on Climate Change, it has become more difficult

to achieve desired outcomes to global problemsthe very

Of the potential game-changers identified in the National

definition of power.

Intelligence Council (NIC) Global Trends 2030 report,

in addition to the predominant ones of economic

Between now and 2030, both the United States and

uncertainties (Europes chief among them) and individual

Europe will increasingly have to pursue their goals in an

empowerment, the trajectory of the ongoing transformation

international environment characterized by what may be

of the Middle East and North Africa may have the most

called situational power. This does not imply multipolarity

direct impact on Europe, while the diffusion of power, the

in the classic sense of three or four major poles, but rather

role of the United States, and the character of US-China

a world of diffused power, where any single actors ability

relations will have a larger impact in shaping the global

to shape outcomes will differ according to the nature of

system writ large.

the issue or problem. Different constellations of actors

will have different political weights, and on some matters,

Europe to 2030

like global health issues, for instance, nonstate actors

As Europe confronts its current malaise, its economic and

may even wield more power than states. The principle

political trajectory is complicated by the impact of global

would be that form follows function. Who sits at the table

trends. How the EU addresses its internal challenges will in

depends on what he or she brings to it. Thus, on the Iran

large measure determine its preparedness for the world of

nuclear problem, the UN Security Council P5+1 group

2030. As a historically unprecedented experiment in meta-

has led diplomatic efforts. On North Korea, the six-party

sovereignty or supranational governance, the European

talks have brought together key actors in northeast Asia

project remains very much a work in progress. The idea

(the United States, China, Japan, Russia, South Korea,

of Europe was animated by the devastating experience

and North Korea). Since the end of the Cold War, ad hoc

of World War II, and a desire to avoid the patterns of the

multilateralism has become a key to solving international

past. But amid a stagnating economy, the rising generation

problems, and it shows no sign of abating. In fact, in cases

of Europeans appears driven more by local concerns,

like the major emitters group and the Proliferation Security

namely widespread unemployment and a dearth of

Initiative it has proven more functionally relevant than

opportunity, than any unifying political vision. The gap is

established institutions.2

growing between the European Parliaments enhanced

powers under the Lisbon Treaty and its perceived

That said, traditional transatlantic allies will likely remain

popular legitimacy, exacerbated by the Euro crisis and

central to US foreign policy (and vice versa), though

the renationalization of European politics. Worse, new

fissures are opening inside old states, introducing tensions

1 See Ian Bremmer, Every Nation For Itself: Winners and Losers in a G-Zero
World, Portfolio Publishers, 2012; and Moses Naim, The End of Power,
Basic Books, 2013.
2 For more discussion on situational power see US Strategy for a
Post-Western World, Atlantic Council, December 2012.

between Scotland and the United Kingdom, Catalonia and

Spain, and the Flemish and the Walloons in Belgium.

AT L A N T I C C O U N C I L

Protestors took to the streets in Greece to speak out against austerity measures. Photo credit: Flickr.

The uneven distribution of Europes challenges reflects

Commission conducts twice annually, finds Euro-

a multispeed and multitiered reality: the Northern

skepticism ascendant.4 Confidence is eroding not only in

tier, including Germany, Austria, the Netherlands, the

debtor nations like Greece and Spain, where 72 percent of

Scandinavian countries, and perhaps Poland, are best

the population distrusts the EU, but in prosperous nations

positioned for 2030, with viable social welfare states and

like Germany and the Scandinavian countries.

more competitive economies. The debtor states of the

Mediterranean tier, including Portugal, Spain, Italy, Greece,

This political dynamic, in large measure a consequence

and France, face enormous challenges of structural

of the global financial crisis, fuels new populist pressures,

reform and economic competitiveness. In the post-Cold

with voters in some of the Northern tier donor states

War states of the southeastern tier, including the Balkans,

growing to resent their responsibility for bailing out debtors,

Hungary, Romania, and Bulgaria, a sort of backlash

and Mediterranean states resenting the austerity policies

against EU norms is unfolding.3 The United Kingdom is

accompanying the European Central Banks rolling bailout

rethinking its place in the EU altogether. At the same time,

of $1.1 trillion and counting.

the absence of a dynamic and cohesive Franco-German

core has created a disconcerting leadership deficit.
New Populism, Demographics, and Europes
Democratic Deficit

In this economic climate, and with social media

empowering people to associate and organize more
effectively than ever before, voters are coming to reject
established political parties. A sense of alienation from

Divides thus appear both among EU states and within

Brussels elites and EU institutions coupled with populist

them. The Euro-barometer poll, which the European

antiglobalization sentiment has sparked a search for new

3 See Neil Buckley, Transition Backlash in Eastern Europe Sets off

Alarms, Financial Times, March 13, 2013, p.2.

4 See Jose Ignacio Torreblanca, Europe has lost its citizens, European
Council on Foreign Relations, March 13, 2013.

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identities on both the left and the rightwhere parties

The 2014 EU Parliamentary elections promise to be

largely oppose immigration. In Italy, the leftist Five Star

a bellwether event in this regard, particularly if they

movement headed by comedian Beppe Grillo garnered

result in the appointment of a president of the European

25 percent of the vote in the February 2013 parliamentary

Commission. However difficult it would be to enact, direct

elections, after a strong but ultimately unsuccessful

election of the president of the European Commission could

showing by Greeces radical leftist Syriza coalition in June

also help bridge Brussels legitimacy gap with the people.

2012. In recent years, Denmarks Peoples Party and

In any case, increasing Europeans comfort level with their

its Freedom Party, the Swedish Democrats, the French

institutions will come as a prelude to European political

National Front and Italys Northern League have also

union, and indicates how problematic the idea might be.

impacted their respective countries politics from the far

right.

German Chancellor Angela Merkel suggests that the

answer to EU economic and political challenges is

One cannot separate Europes political dynamics from their

more Europe.5 Berlin appears uncomfortable with its

economic underpinnings. The IMF projects the eurozone

dominant economic role, which has resulted in a backlash

will shrink 0.3 percent and experience an anemic growth

of widespread Germanophobia. Yet in a provocative

rate of 0.1 percent in 2013. All told, winding down debt,

speech in 2011, Polish Foreign Minister Radoslaw Sikorski

working through banking problems and enacting difficult

appealed to Berlin for EU leadership, declaring, I fear

labor reforms to restore economic growth will take Europe

German power less than I am beginning to fear German

at least three to five years, and perhaps the rest of the

inactivitya statement all the more remarkable from a

decade. As the outlier political groupings evolve or unravel,

Pole.6

they will reveal whether the new populist trend reflects

cyclical developments or deeper structural problems.

While the Germans have moved cautiously toward banking

union and a pooling of debt, their role in Europe and their

That economic backdrop may complicate efforts to

broader approach to foreign policy remain tentative and

rejuvenate the European project over the coming

uncertain, particularly toward conflict-prone areas like

generation. However, to the extent that the banking union

the Middle East. As columnist Philip Stephens wrote in a

centralizes EU members around a common financial

thoughtful commentary in the Financial Times, if Berlin

system, Brussels response to the economic crisis could

is not to be accused of building a German Europe, it has

strengthen EU political bonds, as well. The prospect of

to develop a narrative about its willingness to carry the

political union still seems over the horizon, but by 2030, the

responsibilities of a European Germany.7

EU may bear greater resemblance to the federalist system

of the United States than to the United Nations.

Absent a coherent Franco-German core to project a

unified Europe, how and when Germany brings clarity to

In addition to economic recovery, restoring a perception

these large strategic questions is uncertain. Yet much of

of legitimacy in European leadership will almost certainly

the answer to the question of whether the eurozone will

necessitate a refurbishing of EU institutions, including the

become a coherent economic space and Europe will play

European Parliament, the presidency of the European

a global role commensurate to its weight in 2030 hinges in

Commission, and the Commission itself so that all become

large part on the German question.

more closely tied to the national politics of their member

states. Notionally, there are a range of actions both the

Regardless, Europe will face new demographic challenges.

European Parliament and national parliaments could take

They begin with the graying of the EU population. In 2030,

to strengthen links between voters and elected members,

roughly 25 percent of the EUs population will be over the

such as creating new institutional links between Brussels

and other EU member capitals and more closely monitoring
the European Parliaments legislative process.

5 See for example, Merkel Demands More Europe, Deutsche Welle, June
7, 2012: http://www.dw.de/merkel-demands-more-europe/a-16007150.
6 Cited in the Economist, November 29, 2011.
7 See Philip Stephens, Germany Should Face the German Question,
Financial Times, April 18, 2013.

AT L A N T I C C O U N C I L

age of sixty-five. A 2010 Pew Center report estimates that

In May 2013, the Obama administration eliminated a key

the number of Muslim immigrants in Europe will grow from

impediment preventing US companies from exporting

44.1 million in that year to 58.2 million in 2030. In France,

natural gas. The United States has already witnessed a

Belgium, and Austria, Muslim populations are projected

surge in energy-intensive industries, including chemicals,

to grow to about 10 percent of the total; in Bulgaria, 16

petrochemicals, and steel. Refurbishing of the US financial

percent; and in Sweden,where there are some 500,000

sector has led to new buoyancy: estimates that US non-

Muslim immigrants (6 percent of the total population), the

financial firms now hold cash reserves of $1.5 trillion,

immigration rate may nearly double over the same period.

consumer debt is coming down, and the housing market is

And these projections of Muslim immigration may even be

recovering. All these developments suggest challenges to

low, if the Arab Awakening results in continued turmoil.

European competitiveness.

Muslim immigrants tend disproportionately to fill the ranks

of the unemployed in Europe, adding a layer of stress to

The EU faces two near-term internal economic challenges:

social welfare systems and the respective social contracts

reform and stabilization of its financial sector, and labor

of European states, and fueling nationalist parties. The May

reform in Spain, France, Italy, and other Mediterranean

riots in Sweden were testimony to this problem.8

states. To restore lasting growth, Brussels will have to

resolve both problems.

This reality also affects Turkeys relationship with the EU.

Prior to the recent anti-Erdogan political unrest, European

The controversy over the recent Cyprus bailout, with

reluctance about Ankaras accession to the EU had been

demands that bank account holders bear some of the

diminishing. But the cultural baggage of past debates and

burden highlights the overlap of the sovereign debt crisis

Europes faltering economic performance has made Turks

and banking crisis as well as the distance the Europeans

themselves more skeptical about the EU. Given Turkeys

must go to achieve true banking uniona single system

economic dynamism and its important role in managing

of supervision, resolution, and deposit insurance. Since

the transformation of the Middle East and North African

the crisis began to unfold in 2007 and 2008, the EU has

(MENA) states through the G-20 and other international

gradually developed a means of responding to crises, the

groupings, Brussels could reap significant benefits by

European Stability Mechanism. The possibility of the Baltic

granting it membership in the EU.

states, Poland, and other recent and new Central European

EU members joining the Eurozone in the coming decade

European Economic and Energy Futures

could lead Sweden and Denmark to rethink their exception

Europes malaise appears even worse in the context

to the eurozone.

of global economic trends. Emerging G-20 nations,

particularly China and India, continue to drive global

One consequence of the EU financial crisis has been

growth, albeit at reduced levels. Trade and investment are

a contraction of European banks lending, which in turn

increasingly becoming South-South phenomena, as the

reinforces the austerity measures that are spurring political

Asia-Middle East energy nexus illustrates so dramatically.

tensions between donor and debtor states, and within

Two-thirds of Mideast oil exports now go to Asia, and

debtor states themselves. Unlike the US financial bailouts,

at least 70 percent of Asian oil imports originate in the

under which US banks largely cleared their balance sheets,

Mideast. Continued intra-regional trade and investment

the EU bailouts have proven protracted and difficult.

growth in both Asia and Latin America also underscore

these trends. Similarly, the United States appears poised
for an economic resurgencedespite a dysfunctional
political systemdriven by the shale gas revolution.

To restore Eurozone economic competitiveness, however,

Brussels will need to do more than meet basic challenges
of fiscal discipline and financial supervision. The EU will
need to make a host of structural changes, including
pension reform, education and innovation policies, and not
least, reform labor relations.

8 See Ian Traynor, Sweden join Eruope-wide backlash against

immigration, The Guardian, 24 September 2010.

AT L A N T I C C O U N C I L

Unemployment in the European Union

70%

Unemployment Rate

60%
50%
40%
30%
20%
10%
0%

2008
6.8

2009
8.1

2010
9.7

Germany

8.1

Spain

9.0

7.5
15.9

Greece

21.7

25.0

EU Youth (Under 25)

15.1

18.1

EU

2011
9.5

2012
10.1

2013
10.9

7.6

6.5

19.2

20.6

5.6
23.5

26.4

29.6

37.5

52.1

59.1

21.2

21.0

22.3

23.5

Year

5.4

All data from Eurostat representing January 2008 to 2013.

Among Mediterranean states, Spain stands at the forefront,

the sort seen in the United States.10 Similarly, Finlands

creating more flexible arrangements between management

educational excellence also may offer a best practices

and unions. Since 2008, Spanish labor productivity has

example for reform in that realm.

increased by more than 11 percent, and the country has

seen new investment in its industrial sector. While progress

New Economy

is evident in Ireland and Portugal, France, whose eroding

In the coming generation, Europe must position itself more

economic competitiveness has been a concern in recent

competitively with respect to both innovation and adaptation

years, is more problematic. And perhaps the largest

of new technologies, ushering in what some call an

concern in this regard is Italy, whose recent election results

emerging Third Industrial Revolution. As in the rest of the

hint at popular resistance to reform.9 The sheer magnitude

world, Europe is witnessing a convergence of technologies

and protracted nature of youth unemployment, with all its

that are mutually enabling: information technology, additive

attendant social consequences, underscores the need for

manufacturing (3D printing), robotics, nanotechnology, and

serious reform.

biotechnology. All of these are currently in varying stages of

commercial adaptation.

For the entire suite of necessary structural reforms, the

Nordic countries appear to hold a considerable amount

Thus, in the near future, instead of ordering a toy or device

of soft power appeal vis--vis the Mediterranean states.

from Amazon, consumers may buy the electronic blueprint

Sweden and Denmark, for example, have enacted

and create it in their own 3D printer. Bio-printing of human

pragmatic reforms that have made their social welfare

cells and organs is another example of overlapping

states more viable and have limited income inequality of

transformational technologies. Carbon nanotubes may

9 See for example, Tony Barber, Spains labour reforms set the pace for
rest of bloc to follow, Financial Times, February 13, 2013, p.2.

10 See Economist, Special Report: Northern lights, February 2, 2013 for a

discussion of Nordic successes in reforming the public sector to be more
efficient.

AT L A N T I C C O U N C I L

become capacitors, providing new and improved power

growth in gas production has only meant that US firms

sources for electric vehicles. Nanotechnology is currently

are applying the technology more to tight oil in shale

used in sunscreens, paint, and stain-resistant fabrics.

formations. This has driven up US oil production to over

Global sales of nanotechnology-enabled products are

7 million barrels per day (bbl/day), and in the next year,

already estimated at $254 billion, and the US National

perhaps as much as 8 million bbl/day. The International

Science Foundation projects they will grow to $3 trillion by

Energy Agency projects that US oil output will overtake that

2020.

of Saudi Arabia by 2020, and that the United States will

11

become a net oil exporter by 2030.12

The above is just illustrative of the cauldron of innovation
bubbling up. As these new technologies and the industries

Meanwhile, shale gas is dramatically altering the US energy

that produce them begin to reshape the economic

mix. According to the EIA, natural gas now rivals coal for

landscape, methods of production will become more

electricity production, with coal accounting for 34 percent,

local, more customized, and niche-oriented. 3D printing,

and gas for 32 percent. Natural gas also burns 50 percent

for example, may significantly alter the way global supply

cleaner than coal, reducing greenhouse gas emissions.

chains operate for a wide range of products from medical

instruments and auto parts to cellphones. In this growing

This has a range of implications for Europes energy future

knowledge economy, competitive investment and regulatory

and its economy writ large. In the near term, the largely

environments and appropriately skilled and flexible work

unanticipated US energy surge has meant a substantial

forces will become important ingredients for success.

increase in European coal imports from the United States.

US shale has also resulted in a greater availability of gas

At present, Europes Northern tier appears best positioned

on world markets, making available resources which the

to adapt to these trends. Sweden and other Nordic states

United States had earlier been projected to import.

that are most wired and have a high proportion of collegeeducated citizens appear well-situated to adapt to the

Perhaps most importantly in terms of energy security, the

new economy. The pace and scope with which the rest

US shale revolution is leading to a growing global gas

of Europe makes the necessary educational and labor

market, severing the link between oil and gas prices, and

reforms in response to the current crisis will shape how

increasing the role of liquefied natural gas (LNG). LNG

competitive the EU as a whole is in the emerging economic

currently accounts for less than 15 percent of natural

universe. Research and development investments will also

gas production. Given the difficulty and large front-end

be important. The degree to which the EU strengthens

investment required to build gas-receiving terminals, large-

the European Research Area and the extent to which

scale expansion of the LNG trade will likely not occur until

it mobilizes and incentivizes the knowledge economy

2015 or 2020. At present, Europe imports 36 percent of its

across the EU will be a significant factor shaping its

gas from Russia, though specific dependency varies from

competitiveness.

country to country. Much to Europes benefit, however,

recent gas discoveries in the Eastern Mediterranean and

Energy Trends

offshore Mozambique will accelerate the growth of a global

The most dramatic energy trend reshaping global energy

LNG market beginning by the end of the decade.

markets is the Shale Revolution, whose long-term impact

is only starting to be felt, and whose consequences

The shale revolution is having a major impact on Gazprom

for Europe are, at best, a mixed picture. The hydraulic

and other Russian gas firms. With shale allowing US

fracturing or fracking revolution has dramatically reduced

companies to sell gas at prices 75 percent below what

US natural gas prices, and the US Energy Information

Gazprom charges eastern European customers, the most

Agency estimates that the United States is now producing

important cog in Russian President Vladimir Putins corrupt

nearly 70 billion cubic feet per day. Yet the diminishing

state capitalist system may now be at risk. Gazprom

11 See Peter Marsh, The New Industrial Revolution, Yale University Press,
2012. See particularly chapters 9 and 10.

12 Lannanh Nguyen, U.S. Oil Output to Overtake Saudi Arabia by 2020,

Bloomberg News, November 12, 2012.

AT L A N T I C C O U N C I L

has been forced to lower its prices to Europe, and the

defense capability. As a 2012 RAND Corporation analysis

European Commission is investigating it for price-fixing.

concluded, planned defense cuts to the armed forces of

The result likely will increase pressure on Gazprom to

the UK, France, Germany, Italy, Spain, Netherlands and

lower prices further. Gazproms market value has already

Poland (which together comprise 80 percent of NATO

plummeted from $365 billion in 2008 to $120 billion today,

Europes defense spending)will have a serious impact

and the company has canceled major projects, including

on NATO Europes ability to deploy and sustain power over

the Shtokman gas project in the Arctic. Gazprom and

long distances.13

other Russian firms are looking to LNG for future exports,

underscoring the trend of delinking gas and oil prices. This

The United Kingdoms capacity to project air and sea

is likely to lead to lower gas prices for Europe over the rest

power will be significantly diminished, and it faces difficult

of this decade and more diverse sources of supply by the

tradeoffs. Upgrading Britains Trident nuclear force could

2020s.

cost $60 billion. How will that decision impact spending on

conventional military forces?

Outside North America, shale gas development is still in its

embryonic stage. The UK has only just lifted its moratorium

NATO Partnerships and EU Geo-Economic Power

on shale gas, and has yet to pursue full-fledged exploration.

In his farewell address in Brussels, former US Defense

Poland has led Europe in the search for shale, awarding 111

Secretary Robert Gates warned NATO allies of the very

exploration concessions to both domestic and foreign firms.

real possibility of collective military irrelevance if Europe

Geology, infrastructure, and tax and regulatory policies

did not assume its share of the burden. Though at some

have placed limits on exploratory drilling. ExxonMobil

$300 billion, Europes defense spending is collectively the

withdrew, and Conoco Phillips has abandoned some of its

second largest in the world, the total is far less than the

options in Poland. Warsaw is forging ahead, but production

sum of its parts. Growing UK-France defense cooperation

is unlikely before 2015. And Ukraine is now exploring shale

may bridge some capability gaps, but continuing defense

gas development, as well.

reductions in both countries will limit the benefits of such

collaboration. Nonetheless, Pariss continued integration

The shale revolution will have several negative implications

into NATOs command structure will remain vital. For

for Europe. European industrialists are increasingly

Europe to maintain its relevance as a military actor, its

concerned that cheap US gas will put them at a competitive

militaries will need to pool their capabilities and pursue

disadvantage. At the same time, lower prices of gas also

greater defense-industrial cooperation.

are changing the economics of wind and solar power, and

dampening enthusiasm for the expansion of nuclear power

Despite its limitations, NATO has demonstrated its enduring

in Europewhich had already suffered dramatically in the

utility as a global security institution. Even if scaled back,

wake of the meltdown at the Fukushima plant in Japan.

it will remain an important actor, particularly with respect

Though gas is viewed as a transitional energy source, it

to the Middle East and North Africa, and on functional

has delayed a shift to renewable energy sources, which

issues such as counterterrorism, maritime piracy, and

are simply not cost-competitive. This will mean a longer

cybersecurity.

timeframe for subsidies that Germany and other EU states

provide for renewables. The wild card in this energy picture
is technology. Breakthroughs that lower the cost of solar
and wind energy may still occur in this decade, but they are
difficult to predict.

Europe as a Global Actor

However, the precipitous decline in European defense

budgets and the continuing growth of NATO partnerships
may change the character of the alliance. Many NATO
partners in Europe, the Gulf, and Asia can provide
resources to address the primary security challenges
outside the transatlantic area. To the degree that its new

What do all these trends suggest about Europes role

in a world system where economic and strategic weight
is shifting east and south? One clear consequence of
European austerity is a steadily diminishing European

13 See John Gordon, Stuart Johnson, F. Stephen Larrabee & Peter A. Wilson,
NATO and the Challenge of Austerity, Survival: vol. 54 no.4 AugustSeptember 2012; pp. 121-142.

AT L A N T I C C O U N C I L

Real GDP Growth Rate (volume)

Real GDP Growth Rate (volume)

Percentage Change on Previous Year

UK

Norway

Sweden

Italy
France

Spain

Greece

Germany

EU

-1
-2
-3
-4
-5
-6
-7
-8

2008

2009

2010

2011

2012

Year

2013
All data from Eurostat. GDP figures per annum.

partners prove willing and able to collaborate institutionally

To the degree that it projects a common approach to the

and operationally, NATO may complement its traditional

world, the transatlantic partnership can exert greater global

approach to its member states by essentially enabling

influence. The transatlantic economy accounts for some

NATO to become the hub of a broad, international security

50 percent of global GDP and nearly 40 percent of global

network. However, there are risks to such an approach.

trade. Shared democratic values and habits of military

It could lead to dilemmas over potential contingencies,

cooperation underscore the continued importance of the

with some members and partners diverging from others.

transatlantic partnership as a force multiplier for both US

If taken too far, a hub-and-spoke system could transform

and EU foreign policy objectives. This is evidenced in

NATO into a different type of global security actor and risk

European participation in Afghanistan, the EUs support for

undermining the cohesion of the alliance.

tough sanctions against Iran, and pressure on the Assad

14

regime in Syria.
Nonetheless, as a practical matter, over the coming
generation, all of this points to a minimal European military

In regard to emerging challenges, the EUs proposed Code

role beyond its periphery. If the EU continues to punch

of Conduct for Outer Space is an important contribution

below its weight as a military power, Europe may better

to the debate over how to manage the global commons.

conceive itself more as a geo-economic and diplomatic

US-EU and NATO collaboration will be critical to defining

actor, with its security role concentrated more in the

new rules for a stable and open cyberspace domain as

nonmilitary realm, namely in foreign assistance, conflict

well. The EU can also play a significant role in East Asia: It

prevention, and democracy promotion. If the European

has an ongoing dialogue with Beijing and is Chinas largest

Union solidifies and restores the power of attraction, Europe

trading partner, with more than $500 billion in two-way

will wield a modicum of soft power in other regions.

trade in 2011. The EU has also established the Asia-Europe

Meeting, an annual high-level dialogue with Asian nations,
and though that mechanism leaves much to be desired, it

14 See Franklin D. Kramer, NATO Global Partnerships: Strategic Opportunities

and Imperatives in a Globalized World, Atlantic Council, Washington, DC,
2013 for a detailed discussion of this topic.

AT L A N T I C C O U N C I L

demonstrates the EUs desire to enhance its ties with Asia

writ large.

Leaders of some of the worlds most powerful emerging economies gathered at the 2012 BRICS Summit. Photo credit: Wikipedia.

EU engagement with Asia reflects the reality that

countries may be able to play a facilitating or mediating role.

challenges to global security and prosperity in the

To the degree that the G-20 can become a venue for global

generation ahead lay beyond geography and, more often

consensus-building, it may be a forum to test the waters on

than not, outside the realm of military force. Though the

revising rules and formulating new ones.

EU and the United States differ on a range of issues, from

climate change to agricultural policy, they have ample

The Russia Question

opportunities to cooperate in the Asia-Pacific, including

One big uncertainty is Russias future role. That may turn

coping with Chinas rise and dealing with North Korea.

on the longstanding question of whether or not Russia

seeks to become more integrated into Europe and the

One difficult challenge for Europe is adapting its role in

global system or whether, as its current trajectory suggests,

international institutions to new power realities. From

it moves toward a Eurasian future.

the UN systemparticularly the UN Security Council

to the Bretton Woods institutions, Europe tends to be

As highlighted by periodic protests and the prevalence

overrepresented. In the coming decades, the EU and the

of online social networks, Putin 2.0 now faces a very

United States both confront the challenge of how and when

different Russia than he did in his first twelve years. Russia

to reshape the international system to reflect the growing

has a new middle class that has more than doubled in size

weight of China, India, and other emerging G-20 economies

since 2000, and by some estimates now consists of up to

while preserving the values, principles, and norms that have

25 percent of Russias dwindling population. Since then,

led to the successful expansion of the global system since

Russias per capita GDP has doubled to roughly $16,000,

1945.

in large measure as a result of booming oil and commodity

prices.15

The crucible in which this is most clearly occurring is the

International Monetary Funds reallocation of voting shares,

Since 2000, new car registrations in Russia have risen by

but the same process will play out in other international

300 percent. Roughly 60 percent of Russians now use the

institutions in the period ahead. With less of a direct stake

internet (a 500 percent increase), 78 percent of children

in the IMF, Europes smaller actors such as the Nordic

15 See Economist, Daily Chart, June 18, 2012.

10

AT L A N T I C C O U N C I L

between nine and sixteen use social networks, 42 percent

Absent concerted moves toward economic modernization,

read foreign media, and the number of Russian tourists

an independent judiciary, and reform of its business

who travel abroad has more than doubled. However much

environment, it is difficult to envision Russia becoming

Putin may have stifled reform, he faces growing pressure

more than an eclectic, issue-specific partner with both

from below.

the United States and Europe in a future that would have

16

elements of cooperation and competition. While Russia is

Though the Russian economy has experienced pockets of

unlikely to become a security threat to Europe in the way

change, on the whole, it has yet to diversify. In the wake

that it was during the Cold War, if it fails to alter its current

of Russias ascension to the World Trade Organization

political and economic trajectory, it promises to be a difficult

in August 2012, Moscow has also shown a tendency to

and troubling neighbor. The two factors that may impact

backslide on its WTO commitments, unlike China, which

Moscows mindset toward the West are the direction of

used its WTO ascension as a catalyst for change. Russias

the EU and its receptivity to Russian ambitions, and an

entry into the WTO coincides with Putins proclamation of

increasingly powerful China along its borders.

ambitious new economic goals and promises of a range

of political reforms. The Russian president has given large

What direction Ukraine takes vis--vis Europe may also

salary increases to teachers, civil servants, and engineers.

have an impact on Russias strategic trajectory. For

He promises to create 25 million highly-skilled jobs. He calls

Ukraine and other prospective partners in Putins nascent

for increasing investment from 20 to 27 percent of GDP by

Eurasian Union scheme, closer ties to a recovering and

2018. He aims to move Russia up to 20th from 120th on the

more coherent EU would likely have far greater appeal.

World Banks ease of doing business index. And he plans to

A westward-looking Ukraine, particularly one with less

move Russia beyond its dependence on oil and gas.

dependence on Russian energy, could, in turn, affect

Russias approach to Europe as well. The United States

According to the World Bank, the share of oil and gas as a

and the EU will both seek to create an environment

portion of Russias total exports rose from less than one-

most conducive for Russia to move in a direction of

half in 2000 to two-thirds in recent years. Oil, gas, and other

modernization and greater integration with Europe and the

extractive industries now account for more than 60 percent

West.

of Russian GDP.17 However, Russias oil output is projected

to plateau in the middle of the decade.18 To avoid deficits,

Short of Russia making the type of strategic choices that

Moscow pegs its budget to oil at a price $115 per barrel,

Deng Xiaoping made in opening China, or more recently,

but many analysts project a softening oil market, with a

the Myanmar governments moves to open up its country

price range of $70-$100/bbl through 2014, and by some

to globalization, it is difficult to envision what the United

estimates to 2030.

States and EU can do to foster Russian efforts to join the

21st century knowledge economy, qualitatively thicken its

No one knows whether Russia will remain a declining petro-

economic relationship with the EU, and/or develop a more

state or use its ascension to the WTO as an opportunity

robust partnership with NATO so long as it continues on its

to diversify its economy and catalyze political reform. But

current economic and political trajectory.

the overwhelming pattern of behavior, from charges of

rigged Duma elections, to new laws to penalize protestors,

To the extent cooperation on missile defense can be

crackdowns on NGOs that receive foreign funds, efforts

realized, that could be a stepping stone toward a broader

to censor websites and social networks, and an ongoing

Russian collaboration with NATO. Similarly, if efforts at a

failure to implement key reforms, has deepened skepticism

diplomatic resolution of the Syrian crisis prove successful

about Russias ability to change.

and counterterrorism cooperation deepens, these might

have a catalytic effect on Russias broader relations with

16 Economist. Prev. cited; See also Russian Institute of Contemporary

Development, presentation at the Center for the National Interest,
February 28, 2013.
17 See Kathy Lally, Washington Post, p. A16, July 22, 2012.
18 See World Bank, http://www.worldbank.org/en/country/russia/overview.

AT L A N T I C C O U N C I L

the United States and EU.

11

Policy Priorities

The Middle East Challenge

Looking to 2030, where are the most significant

One high-priority strategic issue that is both an imminent

opportunities for shaping Europes future? The greatest

challenge and long-term opportunity for the transatlantic

near- to medium-term opportunity for Europe and

community now and in the years approaching 2030 is

transatlantic relations is the proposed Transatlantic Trade

helping to shape the outcomes of the transformation of

and Investment Partnership (TTIP). TTIP holds great

MENA countries. As is already evident in the struggles

economic and geostrategic potential on both sides of the

of Egypt and Libya, this process will vary from country to

Atlantic, and leaders should view it not in narrow terms of

country, and will be protracted, erratic, and nonlinear. At a

the trade issues it addresses, but in light of its potential

time of fiscal constraints and diminished western influence,

long-term strategic benefits. Achieving a comprehensive

sustained, active coordination at both the top political

agreement that creates the basis for the worlds largest

levels and at working levels is especially critical. It will be

single market would:

important to think through lessons learned from the EUs

previous Mediterranean initiative and from US failures of

Enhance US and EU economic dynamism and hasten

nation building in Iraq and Afghanistan.19

a return to growth, adding by some estimates as

much as 0.5 percent to their respective annual GDPs,

For the EU, economic integration of both sides of the

creating tens of thousands of jobs, and boosting

Mediterranean is an important strategic objective, as

economic synergies;

underscored in the European Neighborhood Program. The

process will necessarily be gradual, and shaped by the

Reinvigorate the transatlantic partnership and US-EU

internal dynamics of each MENA country.

relationship;
Providing incentives and resources to foster rule of law, civil

Foster a more coordinated approach that could

increase US and EU leverage in shaping the future of
the global trade system. An accord could shape new
global standards in areas such as intellectual property
rights, investment, and emerging new sectors such as
industries based on nanotechnology, biotechnology,

society, education, and participation of women in society,

as well as encouraging small and medium-size business
and an entrepreneurial culture should remain focal points
of both US and EU bilateral initiatives. The principles of
more for more and less for less guiding both US and EU
programs need to be carefully applied.

nonfood biofuels, 3-D printing, and electric vehicles;

It will no doubt be challenging for European capitals and

Enhance prospects for US energy exports to Europe;

Bring new momentum to the Trans-Pacific Partnership

(TPP), the Obama administrations effort to forge a
new high-standards trade accord with Pacific Rim
economies that could bolster the global trade system
after the breakdown of the Doha Round of WTO
accords in 2008;

the United States to coordinate outside assistance at both

the strategic and tactical levels over a long period. The
Deauville Partnership established at the 2011 G-8 meeting
can be an important mechanism for coordinating and
galvanizing the international community to assist the Arab
countries in transition. The partnership includes the G-8
countries, but also Saudi Arabia, the United Arab Emirates,
Kuwait, Qatar, and Turkey and major international financial
institutions, including the World Bank, the International
Monetary Fund, and regional financial bodies. The

Sharpen the strategic choices facing Russia; and

partnership extends to the transitioning states of Egypt,

Tunisia, Libya, and also to Morocco and Jordan, which

Broadly, serve as a source of leverage for the

might be termed adapting Arab monarchies. US and EU

transatlantic community at a historic moment when

power is diffusing to emerging G-20 economies.

12

19 For a detailed assessment and recommendations on the Western

response to the Arab transformation, see Danya Greenfield and Rosa
Balfour, Arab Awakening: Are the US and EU Missing the Challenge?;
Atlantic Council, June 2012.

AT L A N T I C C O U N C I L

leadership will also prove essential in delivering the $38

The Nordic countries and the Baltic states could have

billion in multiyear pledges which bilateral donors and

an impact on economic modernization in northwest

international financial institutions have promised.

Russia through interactions that incentivize best

practices in business and finance;

Lastly, while the timing is uncertain, the United States

and EUand perhaps NATOshould gear up for what

will unavoidably be a major humanitarian, security, and

The Nordic countries may also be able to play a

mediating role in Russias relations with the West; and

economic exercise in damage control in post-Assad Syria.

Lastly, non-NATO states may enhance bilateral

EU/Global Opportunities

military-to-military ties with the United States, building

In regard to energy, the EU might benefit from having an

on, for example, Swedens experience in Afghanistan.

independent commission take a fresh look at the shale

revolution, and its potential risks and rewards in Europe.

MAY 2013

Could European countries produce appreciable quantities

of shale gas and oil at an acceptable risk? Another aspect
worth examining anew is shales impact on the pace
of commercialization of renewable energy sources. A
successful US-EU Transatlantic Trade and Investment
Partnership permitting American energy exports amid a
growing global LNG market could greatly benefit European
energy security.
One area where greater US-EU dialogue could result
in greater leverage for both is in regard to the global
commons. There is an urgency to design new rules,
norms and codes of conduct in the realms of the future of
cyberspace, the Arctic, and outer space.
In particular, the gradual thawing of the Arctic resulting
from climate change is beginning to raise a whole set
of issuesboth environmental and economicthat will
require shaping new international rules and norms over the
coming generation and beyond. Transatlantic collaboration
on the Arctic will be critical. The Arctic Council, with a
relevant set of actors, may be an important venue to begin
a coordinated effort to shape a global consensus. Here, too,
the Nordic countries may have an opportunity to shape a
common transatlantic approach that could pay dividends.
In any case, the Arctic should increasingly be a focus of
US-EU dialogue.
Within Europe, there are a number of areas where both the
EU and particular European states outside the Eurozone
and NATO could carve distinct or niche roles:

AT L A N T I C C O U N C I L

13

Atlantic Council Board of Directors

INTERIM CHAIRMAN
*Brent Scowcroft

PRESIDENT AND CEO

*Frederick Kempe

VICE CHAIRS

*Robert J. Abernethy
*Richard Edelman
*C. Boyden Gray
*Richard L. Lawson
*Virginia A. Mulberger
*W. DeVier Pierson
*John Studzinski

TREASURER

*Brian C. McK. Henderson

SECRETARY

*Walter B. Slocombe

DIRECTORS

Stephane Abrial
Odeh Aburdene
Timothy D. Adams
*Michael Ansari
Richard L. Armitage
*Adrienne Arsht
*David D. Aufhauser
Elizabeth F. Bagley
Ralph Bahna
Sheila Bair
Lisa B. Barry
*Rafic Bizri
*Thomas L. Blair
Julia Chang Bloch
Francis Bouchard
R. Nicholas Burns
*Richard R. Burt
Michael Calvey
James E. Cartwright
Daniel W. Christman
Wesley K. Clark
John Craddock
David W. Craig
Tom Craren
*Ralph D. Crosby, Jr.
Thomas M. Culligan
Gregory R. Dahlberg
*Paula J. Dobriansky
Christopher J. Dodd

Markus Dohle
Lacey Neuhaus Dorn
Conrado Dornier
Patrick J. Durkin
Thomas J. Edelman
Thomas J. Egan, Jr.
Stuart E. Eizenstat
Julie Finley
Lawrence P. Fisher, II
Alan H. Fleischmann
Michle Flournoy
*Ronald M. Freeman
*Robert S. Gelbard
Richard L. Gelfond
Edmund P. Giambastiani, Jr.
*Sherri W. Goodman
John A. Gordon
*Stephen J. Hadley
Mikael Hagstrm
Ian Hague
Frank Haun
Rita E. Hauser
Michael V. Hayden
Annette Heuser
Marten H.A. van Heuven
Marillyn Hewson
Jonas Hjelm
*Mary L. Howell
Robert E. Hunter
Robert L. Hutchings
Wolfgang Ischinger
Deborah James
Robert Jeffrey
*James L. Jones, Jr.
George A. Joulwan
Stephen R. Kappes
Francis J. Kelly, Jr.
Zalmay M. Khalilzad
Robert M. Kimmitt
Roger Kirk
Henry A. Kissinger
Franklin D. Kramer
Philip Lader
David Levy
Henrik Liljegren
*Jan M. Lodal
*George Lund
*John D. Macomber
Izzat Majeed

Fouad Makhzoumi
Wendy W. Makins
Mian M. Mansha
William E. Mayer
Eric D.K. Melby
Franklin C. Miller
*Judith A. Miller
*Alexander V. Mirtchev
Obie L. Moore
*George E. Moose
Georgette Mosbacher
Bruce Mosler
Sean OKeefe
Hilda Ochoa-Brillembourg
Philip A. Odeen
Ahmet Oren
Ana Palacio
*Thomas R. Pickering
*Andrew Prozes
Arnold L. Punaro
Kirk A. Radke
Joseph W. Ralston
Teresa M. Ressel
Jeffrey A. Rosen
Charles O. Rossotti
Stanley O. Roth
Michael L. Ryan
Harry Sachinis
William O. Schmieder
John P. Schmitz
Kiron K. Skinner
Anne-Marie Slaughter
Alan J. Spence
John M. Spratt, Jr.
Richard J.A. Steele
James B. Steinberg
*Paula Stern
William H. Taft, IV
John S. Tanner
Peter J. Tanous
*Ellen O. Tauscher
Clyde C. Tuggle
Paul Twomey
Henry G. Ulrich, III
Enzo Viscusi
Charles F. Wald
Jay Walker
Michael F. Walsh
Mark R. Warner

J. Robinson West
John C. Whitehead
David A. Wilson
Maciej Witucki
R. James Woolsey
Mary C. Yates
Dov S. Zakheim

HONORARY DIRECTORS
David C. Acheson
Madeleine K. Albright
James A. Baker, III
Harold Brown
Frank C. Carlucci, III
Robert M. Gates
Michael G. Mullen
William J. Perry
Colin L. Powell
Condoleezza Rice
Edward L. Rowny
James R. Schlesinger
George P. Shultz
John W. Warner
William H. Webster

LIFETIME DIRECTORS

Carol C. Adelman
Lucy Wilson Benson
Daniel J. Callahan, III
Kenneth W. Dam
Stanley Ebner
Barbara Hackman Franklin
Chas W. Freeman
Carlton W. Fulford, Jr.
Geraldine S. Kunstadter
James P. McCarthy
Jack N. Merritt
William Y. Smith
Marjorie Scardino
Ronald P. Verdicchio
Carl E. Vuono
Togo D. West, Jr.
*Members of the Executive Committee
List as of April 24, 2013

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